If you have received a credit card from Citigroup lately, you may be one of many people that got the card unexpectedly. It seems that Citigroup sent out some credit cards recently to customers that were carrying a Macy’s card but were not actively using them.
Several customers are quite unhappy about unexpectedly receiving these cards, particularly considering the fact that receiving cards like this in an unsolicited fashion puts them at a higher risk of becoming victims of identity theft. In fact, many think the company simply sent the cards pre-approved but without authorization.
The reality is that sending a credit card to someone that has not applied for it is a violation of the Truth in Lending Act and Citigroup effectively found a way around this law. After having acquired the Macy’s credit card business, the company decided that it would replace the 3.5 million inactive Macy’s cards in their database with their own credit cards. They sent letters to their customers in August explaining that the cards would be replaced.
The letter informed customers that they had until August 10 to either make a purchase with their Macy’s card or to call a toll free number in order to refuse the card. Those that didn’t comply with their request would have their Macy’s card automatically canceled and replaced with one of their Citi card products.
Many consumers claim that they never received the initial letter explaining the change. Those that did see the replacement letter have stated that the envelope in which it came looked like junk mail and contained the tag line “Coming soon to Macy’s card members – whole new cards with more benefits than ever.” Many probably assumed that the letter was unsolicited junk mail and would have thrown the letter away without ever reading the notification. In addition, when they received the new MasterCard, there was no notice provided explaining that the card was sent in order to replace the Macy’s credit card.
Several consumers that received the MasterCard are quite upset that they were expected to opt out of receiving the card. Many were are also concerned about the possibility of an adverse affect on their credit scores because of the additional credit inquiries made on their accounts. Additionally, the new cards replacing the old cards would have negatively effected the credit scores of account holders even more because the account history on their old cards would have been wiped out completely. Cards with a longer history that have “aged” have a positive impact on credit scores as opposed to brand new cards, which have a negative impact.
Although some have questioned the legality of the switch, legal precedent demonstrates that the change was, in fact, legal. This is because Target switched out its store cards to Target Visa cards in 2005 and, at the time, the US District Court in Illinois ruled that the company was within its legal rights because the swap was a substitution.
Nonetheless, many were very unhappy with the change. The fact that several people were given a higher interest rate with their new MasterCards than what they had with their old Macy’s cards didn’t help either.
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